House prices fell by 2.25% y-o-y in Q3 2019

After about 15 years of uninterrupted house price rises, the Swiss government’s efforts to cool Switzerland’s overheated property market have finally succeeded. House prices dropped 2.25% during the year to Q3 2019, its ninth consecutive quarter of y-o-y declines. During the latest quarter, prices increased slightly by 0.31% q-o-q.

The property market’s slowdown can be attributed to the Swiss National Bank’s stricter lending criteria, designed to lower housing debt (currently 90% of all household debt). The decision of the central bank to abandon its cap against the euro in 2015 also made Swiss real estate more expensive for foreign investors, thereby reducing demand.

A surplus of close to 9,000 rented residential properties is expected this year, according to Wüest and Partner.

Rents, rental yields: yields are lowish, at around 3.27% 

Zurich apartments are expensive, at around €11,467 per sq. m.  

Switzerland: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Zurich € 1,446,840 € 3,946 3.27%
Geneva € 1,377,120 € 3,827 3.33%

Recent news. The Swiss economy grew by about 2.8% last year, up from the prior year’s 1.9% expansion and the highest growth since 2010. However economic growth is projected to slow dramatically to just 0.8% this year, amidst weak domestic demand, according to International Monetary Fund (IMF).